Page 461 - Auditing Standards

As of December 15, 2017

AS 2815: The Meaning of "Present Fairly in Conformity with

Generally Accepted Accounting Principles"

Guidance on AS 2815: Staff Practice Alert No. 4 and Staff Questions and Answers on References to

Authoritative Accounting Guidance in PCAOB Standards

.01 An independent auditor's report contains an opinion as to whether the financial statements present

fairly, in all material respects, an entity's financial position, results of operations, and cash flows in conformity
with generally accepted accounting principles. An identification of the applicable financial reporting framework
is required (see paragraph .08e of the AS 3101, The Auditor's Report on an Audit of Financial Statements

When the Auditor Expresses an Unqualified Opinion).

The purpose of this section is to explain the meaning of "present fairly" as used in the phrase "present fairly . .

. in conformity with generally accepted accounting principles." In applying this section, the auditor should look
to the requirements of the Securities and Exchange Commission for the company under audit with respect to
the accounting principles applicable to that company.

[.02] [Paragraph deleted.]

.03 The independent auditor's judgment concerning the "fairness" of the overall presentation of financial

statements should be applied within the framework of generally accepted accounting principles. Without that
framework, the auditor would have no uniform standard for judging the presentation of financial position,
results of operations, and cash flows in financial statements.

.04 The auditor's opinion that financial statements present fairly an entity's financial position, results of
operations, and cash flows in conformity with generally accepted accounting principles should be based on his
or her judgment as to whether (a) the accounting principles selected and applied have general acceptance;

(b) the accounting principles are appropriate in the circumstances; (c) the financial statements, including the
related notes, are informative of matters that may affect their use, understanding, and interpretation (see

paragraph .31 of AS 2810, Evaluating Audit Results); (d) the information presented in the financial statements
is classified and summarized in a reasonable manner, that is, neither too detailed nor too condensed (see AS
2810.31); and (e) the financial statements reflect the underlying transactions and events in a manner that
presents the financial position, results of operations, and cash flows stated within a range of acceptable limits,

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